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Kiev says Russian army vehicles seized

Nicolas Gaudichet and Galina Korba

Ukraine says it has captured two armoured vehicles belonging to the Russian military as it pushed on with a brutal offensive to snap the back of the pro-Moscow rebellion in the war-torn east.

Fighting has intensified as Kiev ratchets up its push to rout struggling insurgents ahead of a fresh round of diplomacy that will see the presidents of Russia and Ukraine meet next week for the first time in months.

Kiev has accused Moscow of stepping up arms supplies to dwindling rebel-held territories while the West fears that the Kremlin could be planning to invade as a last roll of the dice.

Military spokesman Andriy Lysenko said on Thursday two armoured vehicles from Moscow's Pskov Airbourne division were seized along with documents of Russian soldiers who had fled following a battle close to the second-largest rebel stronghold of Lugansk.

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Moscow has persistently denied allegations it is arming the insurgency, but the claims will stoke tensions as Ukrainian President Petro Poroshenko gears up for a meeting in Minsk with Russia's Vladimir Putin, the heads of Belarus and Kazakhstan, and EU officials next week.

That encounter will come after German Chancellor Angela Merkel jets in to Kiev on Saturday in a show of support for the country's pro-Western leadership.

On the ground, brutal clashes continued to rage for a string of key rebel towns as government forces refocused attempts to cut alleged supply routes from Russia to the dwindling rebel-controlled areas.

Shelling in and around the main rebel hub of Donetsk left 43 civilians dead, local officials said on Wednesday, the latest fatalities in four months of conflict that has killed more than 2200 people.

In Ilovaysk, a key railway hub east of Donetsk, fierce fighting in the past two days has killed 16 servicemen in Ukraine's volunteer battalions, said interior ministry adviser Anton Gerashchenko, calling for army reinforcements to be sent to the area.

Ukraine said one of its attack jets was shot down on Wednesday close to Lugansk, where government forces claim to have battled back control of several districts in recent days.

The United Nations late on Wednesday ramped up its estimate of the number of people who have fled the fighting since April to at least 415,800.

About 200,000 have sought refuge across the border in Russia while about 190,000 are displaced around the rest of Ukraine, the UN's refugee agency said.

The region has been facing a growing humanitarian crisis as residents in beleaguered cities have been left without water and electricity for days.

In the centre of Donetsk, shocked residents struggled to digest the damage to their houses after shelling tore through the area around the city's state-of-the-art football stadium.

"I don't know who to turn to, I don't know who the government is anymore," Inna, a physics professor, told AFP. "Today it is the rebels, but tomorrow Kiev could be back."

As fighting continues in the east and fears remain high over a potential Russian invasion Ukraine's battered economy has continued to tank with the national currency slumping to a record low against the US dollar on Wednesday.

Ukraine's economy minister, Pavlo Sheremeta, announced he was quitting his post following growing disputes within the government over how to turn around the country's disastrous financial situation over the past six months.

Sheremeta has been at loggerheads with premier Arseniy Yatsenyuk, who on Wednesday criticised the limited "speed and depth" of vital reforms central to Ukraine receiving a fresh tranche of $US1.4 billion ($A1.51 billion) in economic aid from the International Monetary Fund later this month.

That is part of a broader $US27 billion rescue package to salvage the economy, but questions are growing over failures by the authorities in Kiev to push through key anti-corruption legislation.

Meanwhile the week-long dispute over a mammoth Russian aid convoy parked at Ukraine's border appeared to be inching towards a resolution.

A first small group of lorries from the roughly 300 stuck at the frontier since last Thursday moved into the customs zone on the Russian side to await long-delayed inspections by Ukrainian border guards.